A fundamental reason that governments provide public goods is that
A) those goods are subject to the free-rider problem.
B) negative externalities are part of the production process of those goods.
C) public goods are merit goods.
D) those goods are perfectly divisible.
Answer: A
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A marginal rate of substitution formula tells us:
A. the rate at which the consumer is willing to exchange one good for another, given the level of utility. B. the rate at which the consumer is willing to exchange one good for another, given the amounts consumed. C. the rate at which the consumer is willing to exchange one good for another, given the consumer's income. D. the rate at which the consumer is willing to exchange one good for another, given the prices of the goods.
Which of the following statements is true?
A. Inflation that is higher than expected benefits creditors, and inflation that is lower than expected benefits debtors. B. When unanticipated inflation occurs regularly, the degree of risk associated with investments in the economy decreases. C. Whether you gain or lose during a period of inflation depends on whether your income rises faster or slower than the prices of the things you buy. D. There are no costs or losses associated with anticipated inflation.
Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Suppose that each of 8,000 firms in a perfectly competitive industry produces 1,000 units of a good and maximizes profits when the price of the good is $10
If there is a permanent increase in demand, in the short run each firm produces ________ 1,000 units and in the long run the number of firms is ________ 8,000. A) more than; more than B) less than; more than C) less than; less than D) more than; less than E) exactly; more than